TaxTMI 
TaxTMI 
1991 (8) TMI 83
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....te Government issued a notification in exercise of powers referable to Sec. 8A of the Act providing certain incentives to entrepreneurs starting new industries in the State, pursuant to State's policy for "rapid industrialisation". The notification contains a package of reliefs and incentives including one concerning relief from payment of sales tax with which this appeal is concerned. The clause in the said notification of 1969 relevant for the present purpose reads: "(I) Sales tax: A cash refund will be allowed on all sales tax paid by a new industry on raw materials purchased by it for the first five (5) years from the date of the industry goes into production, eligibility to the concessions being determined on the basis of a certificate to be issued by the Department of Industries and Commerce." This was followed by a further notification dated 11th August, 1975 envisaging certain modified procedures for effectuating the reliefs contemplated by the earlier exemption notification of 30th June, 1969. The relevant portions of the Preamble and the body of the notification say: Preamble : ".....The Commissioner of Commercial Taxes has suggested that New I....
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....y the appellant for grant of permission might, perhaps, be necessary here. For the assessment year 1976-77, the appellant made such an application to the Deputy Commissioner of Sales Tax (Administration) on 10th November, 1976 for adjustment of the refunds against sales tax due. This permission was granted with retrospective effect from 1st May, 1976, validating the adjustments which the appellant had made during the interregnum. However, for the three subsequent years viz., 1977-78, 1978-79 and 1979-80, similar applications which were made on 29th March, 1977, 20th March, 1978 and 8th March, 1979, respectively, remained undisposed of. In the meanwhile, in anticipation of the permission appellant adjusted the refund against tax payable for these years and filed its monthly returns setting out adjustments so effected. 4. There is, as set-out earlier, no dispute that the appellant was entitled to the benefit of the notification dated 30th June, 1969. There is also no dispute that the refunds were eligible to be adjusted against sales tax payable for respective years. The only controversy is whether the appellant, not having actually secured the "prior permission" would be entit....
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....he Commercial Tax Officer of the concerned jurisdiction issued three demand notices demanding payment of the sales tax. He said prior permission to adjust "had not been considered by the Deputy Commissioner of Mangalore Division, Mangalore, and, therefore, the Commercial Tax Officer was obliged to proceed to recover the taxes." Steps for recovery of the penalties were also initiated. Thereafter, in February, 1980, the appellant moved the High Court for issue of writ of mandamus to quash the demand notices and the proceedings initiated for recovery of penalty under Sec. 13 of the Act. 7. The contentions in the High Court was somewhat different from those urged before us. Before the High Court the Revenue asserted that the very conditions of eligibility for entitlement to these concessions stood modified under a subsequent notification of 12th January, 1977 and that appellant did not satisfy the altered conditions of eligibility. The question, therefore, was whether entrepreneurs who had commenced their ventures prior to 12th January, 1977, could be held to be governed by the terms of the later notification of 12th January, 1977. This question, in principle, had been settled by a ....
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....d the tax. With the result, the demand at Annexure R, S and T would be justifiable and legal". (Emphasis supplied) This is the only ground on which the appellant's right to adjustment is contested by the Revenue. 9. Shri Harish Salve urged that indisputably the permission for the three years had been sought well before the commencement of the respective years but had been withheld for reasons which were demonstrably extraneous. Learned Counsel emphasised that the basic eligibility was conditioned by the notification of 30th June, 1969, which required a certificate from the Department of Industries and Commerce. Both the eligibility and the fact that there was such certification from the Department of Industries were not disputed. Indeed, the requirement of the annual permission for adjustment envisaged by the notification of 11th August, 1975 was, says Counsel, merely procedural as Clause 3 of the notification stipulated that if the conditions were satisfied - there was no dispute they were - the Deputy Commissioner "will permit" the adjustment. Counsel says that if, in these circumstances, the Deputy Commissioner withheld the permission law treats that as done which o....
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............................... To accept the argument of the learned Counsel for the appellant is to ignore the proviso altogether, for if his contention be correct it will lead to the position that if the declaration form is furnished, well and good; but if not furnished, other evidence can be produced. That is to rewrite the clause and to omit the proviso. That will defeat the express intention of the Legislature......" 11. We have given our careful consideration to these submissions. We are afraid the stand of the Revenue suffers from certain basic fallacies, besides being wholly technical. In Kedarnath's case, the question for consideration was whether the requirement of the declaration under the proviso to Sec. 5(2)(a)(ii) of the Bengal Finance (Sales-tax) Act, 1941, could be established by evidence aliunde. The Court said that the intention of the Legislature was to grant exemption only upon the satisfaction of the substantive condition of the provision and the condition in the proviso was held to be of substance embodying considerations of policy. Shri Narasimhamurthy would say the position in the present case was no different. He says that the notification of 11th Augus....
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....litate the commission of fraud and introduce administrative inconveniences, both of which the provisions of the said clause seek to avoid.". (Emphasis Supplied) [See: (1965) 3 SCR 626 at 630] Such is not the scope or intendment of the provisions concerned here. The main exemption is under the 1969 notification. The subsequent notification which contains condition of prior-permission clearly envisages a procedure to give effect to the exemption. A distinction between the provisions of statute which are of substantive character and were built-in with certain specific objectives of policy on the one hand and those which are merely procedural and technical in their nature on the other must be kept clearly distinguished. What we have here is a pure technicality. Clause 3 of the notification leaves no discretion to the Deputy Commissioner to refuse the permission if the conditions are satisfied. The words are that he "will grant". There is no dispute that appellant had satisfied these conditions. Yet the permission was withheld - not for any valid and substantial reason but owing to certain extraneous things concerning some inter-departmental issues. Appellant had....